Human Capital Management's Role In Private Equity Value Creation Explored In New WORC Report

The Workforce & Organizational Research Center (WORC) has unveiled its latest research report, "Thinking Beyond the C-Suite Pays Off — Well, At Least Sometimes: Human Capital Management in Large Private Equity Value Creation." Supported by the Ford Foundation Mission Investments team, the study explores the role of human capital management in value creation at large private equity firms.

Based on interviews with fund managers, deal team members, and human capital operating partners at seven leading private equity firms, including BlackRock Impact Opportunities Fund and TPG, the findings reveal that human capital management is often focused on the C-suite. However, when lower-level workers are crucial to executing a value creation strategy, resources are allocated accordingly.

Decades of research have shown the potential for value creation through improving lower-level jobs. Despite this, such strategies are frequently overlooked in private equity investments. The new research indicates that under specific conditions, large private equity firms are willing to adopt this approach.

The study also highlights the possibility of unrealized gains when human capital management efforts are limited to the C-suite. By dedicating resources to improving lower-level jobs, private equity firms can benefit investors, companies, and workers alike.

"We hope this research will prompt private equity fund managers, deal teams, and human capital operating partners to take a closer look at the unrealized gains that can be captured by treating lower-level workers as an engine of value creation," said Ellen G. Frank-Miller, Ph.D., founder and CEO of WORC.

Frank-Miller expressed gratitude to the investment professionals who shared their insights and to Ford Mission Investments for their valuable partnership. She emphasized that WORC’s study supports the case for Patriotic Capitalism by demonstrating financial returns when improving lower-level work, leading to a more satisfied workforce and healthier communities.

About WORC

The Workforce & Organizational Research Center (WORC) is a woman-owned social enterprise dedicated to fostering a thriving economy where every worker has a job worth having. For more information, please visit www.worcimpact.com.